Title- Relationship of Page Industries Limited with Nifty Fifty and to Calculate Beta
Author- Praapti Sanjay Pande (MBA Marketing)
Introduction
Page Industries is an Indian manufacturer and retailer of innerwear, loungewear and socks. It is the exclusive licensee of Jockey International in India, Sri Lanka, Nepal, Bangladesh, the United Arab Emirates, Oman and Qatar. In 2011, it licensed Speedo swimwear from Pentland Group for India and Sri Lanka. The company was founded in 1994 by Sunder Genomal and his brothers Nari and Ramesh, and together they hold a 54% stake in it.
Objective
To understand the relationship between weekly returns of Nifty 50 and Page Industries and calculate beta (b) of the company to see its significance
Literature Review
Set Target of $1 Billion by 2026
Page Industries is targeting $1 Billion by burgeoning demand for athleisure wear, women’s innerwear, junior’s innerwear and strong demand from Tier-2 and- 3 markets. The company is expanding its share of manufacturing and hiring associates to complete the target by 2026. The company reduced its operating costs by 16 percent to cover up the 4%revenue loss in 2021. (Sangeetha Chengappa Bengaluru, July 30, 2021 )
Strong Growth to Boost Valuation
The underperformance of share in 2021 has led to an appreciation of stock by 16%. The valuation of the company is still not reasonable and on the higher side. The company expects the demand for the athleisure segment to taper once normalization sets in. Theron Page industries is also conscious about the third Covid wave hitting the Industry. (Pallavi Pengonda, 10 Sep 2021)
Data Collection
The closing price data of Nifty 50 and Page Industries Limited was taken from www1.nseindia.com (National Stock Exchange) for the time period 1st Sept 2020 to 31st August 2021. After the Weekly data return is calculated, weekly return column for NIFTY 50 is considered as variable “X” and the weekly returns column for Page Industries Limited is considered as variable “Y”.The following way data is regressed
Data Analysis
Regression Calculated from Data Analysis Add-on in Microsoft Excel, values derived are:
PanInd Shares = 0.500985+0.803nifty
Number of Observations = 48
R Square = 0.19071
F = 10.939
The above equation shows the relationship between Nifty 50(X) and Page Industries Limited (Y). If weekly returns of Nifty 50 increases by 1 unit then weekly returns of Page Industries Limited increases by 0.803 units
Conclusion
As per P value(0.0019) which is less than 0.05, the model is statistically significant at 5% level.
R square =0.19 which means 19% of weekly return of Page Industries depends on nifty50. Balance 81% are other factors which are not in the model.
The model is good and we can depend 19% on it
Reference
https://www.thehindubusinessline.com/companies/page-industries-targets-1-billion-revenue-by-2026/article35611671.ece
https://www.livemint.com/market/mark-to-market/page-industries-needs-strong-growth-to-boost-valuations-further-11631212902423.html